Monday, December 27, 2004

A few words about Social Security

Deluded Person: Social Security is in big trouble.
MaxSpeak Reader: Oh? Why?
DP: It's running out of money.
MR: Rilly? When does it run out of money?
DP: The Trustees say it goes broke in 2042.
MR: Actually the Trustees say it can pay 80 percent of benefits at that point.
DP: Well it's still short 20 percent. It will require a big tax increase or benefit cut.
MR: Actually we require income tax revenues to finance part of benefits starting in 2018. Between 2040, before the system is 'broke,' and after 2042, exactly zero change in taxes is required to finance all benefits. You don't know what you're talking about.

Second Deluded Person: DP is wrong. He is too optimistic. The program runs out of money after 2018.
MR: At that point the Trust Fund has over a trillion dollars.
SDP: They're just IOUs -- not worth anything.
MR: So the Government should default on its debt to the Trust Fund and SS beneficiaries, after spending SS cash surpluses for years and years?
SDP: They're not real bonds. They're just IOUs.
MR: An IOU is a promise to pay. Should the Gov renege on its promise?
SDP: You hate America.
MR: Shut up.

It gets better.
And it's not a long read.
Go read it at MaxSpeak, You Listen, and see one of the longest blogrolls I have ever found.

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